Remember the tragic semi-truck crash involving comedian Tracy Morgan and a Wal-Mart big rig? We discuss the accident and its aftermath in earlier posts including “Tracy Morgan Has Filed Injury Lawsuit Against WalMart Over Semi-Truck Crash: It’s an Important Case.”
There are lessons here for everyone in Indiana and Illinois who shop or work or may have an accident claim against a big national corporation. Insurance claims after an accident involving one of these monster companies may involve ”self-insured” defendants who have ”excess” insurance policies.
Here’s what we mean:
How Insurance Can Work For Big Companies like Wal-Mart
As expected, Tracy Morgan and the other semi-truck accident victims sought justice for their injuries in the truck crash. (These are independent demands.)
Mr. Morgan’s claim was filed by his lawyers. Claims by the others involved in the truck accident were made via their legal counsel.
One thing is the same: they are all demands made against the owner and operator of that commercial truck, Wal-Mart. (Criminal charges were filed against its truck driver.)
Sadly, these claims included not only Mr. Morgan’s personal injuries claim (which included his serious traumatic brain injury) but the wrongful death claim filed on behalf of his friend James McNair, who died in the crash.
Mr. Morgan’s accident case progressed and ended in a settlement. Tracy Morgan settled his case with Wal-Mart back in May 2015.
It is alleged Wal-Mart paid $90,000,000.00 to the famed comedian in settlement of that truck crash claim. Often, settlement amounts are kept confidential, particularly large sums like this one. However, things are different in the Tracy Morgan case.
We know more about how much Wal-Mart agreed to pay Tracy Morgan because Wal-Mart is fighting with its own insurance carriers about whether or not this sum should have been paid.
The actual number alleged, $90 Million, comes from a quote given to the press by a fellow comedian of Mr. Morgan’s ( Wal-Mart and its excess carriers have not confirmed that exact number).
Big Companies, Self-Insurance, and Excess Coverage
This summer, there was international press coverage over the brouhaha between Wal-Mart and its insurance companies. It seems the insurance carriers argued Wal-Mart paid too much and the insurance lawyers were fighting against paying up to their insured, Wal-Mart, on its claim.
What’s going on here? First of all, the defendant was a huge corporation. Wal-Mart, like many other very big companies, has a different kind of insurance coverage than smaller operations or mom-and-pop stores.
Just because of their size and scope, these huge companies can expect to receive all sorts of accident claims continually. Slip and falls; negligent security; truck crashes – these kinds of accidents happen all the time for these big chains. It’s true for Wal-Mart as well as other big retailers, hotel chains, national restaurants, etc.
Big Companies like Wal-Mart Are Often Self-Insured
The result? They have a different kind of insurance in place to deal with accident claims. Here, these big companies are “self-insured” up to a certain amount. Their annual budgets set aside accounts to cover these projected expenses each year. It’s all dealt with internally inside the company.
Their insurance policies don’t come into play until a claim exceeds an agreed-upon amount. That’s why these are called “excess policies.”
In the Tracy Morgan case, Wal-Mart did not have an insurance company adjuster showing up on the scene like an individual would have in a car crash. Its insurance company is different, and is not obligated to pay for legal fees or court costs or cover any damages on the case from the get-go like an individual driver’s policy will provide.
In the Morgan accident, Wal-Mart was a defendant who had agreed to cover its own legal costs, attorneys’ fees, investigation expenses, as well as pay for damages as a “self-insured.” It was only if the Morgan case exceeded a set amount that the Wal-Mart insurance companies’ coverage would apply to the Morgan claim.
Fight Between the Self-Insured Defendant and Its Insurers
Once Wal-Mart settled with Tracy Morgan, and paid him the settlement proceeds, the company could look to its excess policies to see if they cover anything. Here, Wal-Mart filed its claim for reimbursement with its own insurance company – actually, several different carriers.
The excess policy insurance carriers did want you would expect: they challenged the claim, arguing against having to pay the claim demand. In denying a duty to pay on the claim, they were acting pretty much like most any insurance carrier does – first party or excess.
They argued that Wal-Mart settled for too much money because the retailer was in a hurry to end the bad press coverage. So, the argument went, Tracy Morgan was paid more than he was due on his accident claim because Wal-Mart didn’t investigate his claim enough and overpaid.
See the United Kingdom’s Daily Mail coverage, “EXCLUSIVE: Insurers battling Walmart over ‘exorbitant’ $90 million Tracy Morgan crash settlement say the supermarket overpaid to avoid bad press – and that footage of the comic driving his sports car proves it.”
Settlement between Wal-Mart and Its Insurance Carriers
This month, a settlement was announced between Wal-Mart and its insurers. The insurance companies agreed to pay Wal-Mart’s claim regarding the Tracy Morgan accident.
Wal-Mart will be reimbursed by its insurance companies under its excess policies. The exact amount is not known. This time, no one is discussing numbers with the media.
For anyone who is involved in an accident claim with a big retail store like Wal-Mart or another big corperation (like restaurant chains, big box stores, etc.), it’s important to know how sophisticated they may be regarding dealing with accidents, because they are self-insured.
They handle their claims internally, as a part of their own business operations. Whether this means an accident victim is treated more fairly or faces a bigger hurdle to get justice is a big question. Be careful out there!